The Building Tradesman Newspaper

Friday, September 07, 2018

By The Building Tradesman

No stopping CEO pay increases

The average CEO of the 350 largest firms in the U.S. received $18.9 million in compensation in 2017, a 17.6 percent increase over 2016.

If the subject of high CEO pay sounds familiar, it should - it's been going on for decades. While the average worker’s compensation remained flat, rising a mere 0.3 percent last year, the 2017 CEO-to-worker compensation ratio was 312-1. That's far greater than the 20-1 ratio in 1965 and more than five times the 58-1 ratio in 1989, although lower than the peak 344-1 ratio in 2000.

"Why it matters:" said researchers Lawrence Mishel and Jessica Schieder. "Regardless of how it is measured, CEO pay continues to be very, very high and has grown far faster in recent decades than typical worker pay. Higher CEO pay does not reflect correspondingly higher output or better firm performance. Exorbitant CEO pay, therefore, means that the fruits of economic growth are not going to ordinary workers."

Mishel and Scheider, researchers for the labor-backed Economic Policy Institute, published their latest CEO compensation study on Aug. 16. They said CEO pay, which has recently been fueled by cashing in stock options, is off the charts compared to any other measure. CEO compensation has grown far faster than stock prices or corporate profits. CEO compensation rose by 979 percent (based on stock options granted) between 1978 and 2017. The corresponding 637 percent growth in the stock market (S & P Index) was far lower.

And both measures of compensation are substantially greater than the painfully slow 11.2 percent growth in the typical worker’s compensation over the same period and at least three times as fast as the 308 percent growth of wages for the very highest earners, those in the top 0.1 percent.

"CEOs," said Mishel and Scheider, "are getting more because of their power to set pay, not because they are more productive or have special talents or more education. If CEOs earned less or were taxed more, there would be no adverse impact on output or employment."

Judge rolls back anti-worker orders

President Trump issued a series of executive orders limiting the rights of federal government workers. A federal judge last month handed those rights back to the workers.

Judge Ketanji Brown Jackson ruled that key provisions of Trump's three executive orders are either unconstitutional under the First Amendment, violate congressional intent or exceed the president’s authority. The rules restricted the use of on-duty time that union reps can spend representing their members in grievances and on other issues, limited the issues that could be subject to bargaining, and rolled back the rights of workers deemed to be poor performers to appeal disciplinary action against them.

American Federation of Government Employees National President J. David Cox Sr. lauded the ruling: "President Trump’s illegal action was a direct assault on the legal rights and protections that Congress specifically guaranteed to the public-sector employees across this country who keep our federal government running every single day."